Gold Holds Up Amid USD Unwinding While Copper Sinks On Low U.S. ISM

Gold price held up above 1064.5 support level thanks to broad USD weakness due to position adjustments. Traders have been unwinding USD longs, ahead of event risk this week: the European Central Bank policy meeting tomorrow December 3, and U.S. Non-farm Payrolls on Friday.

However the downside of gold price remains vulnerable to macro shocks, be that data or market action, as NFP approaches and so does the Federal Reserve’s meeting on December 16.

Copper price gains of the last two sessions after U.S. Institute for Supply Management’s manufacturing index dropped to the lowest since 2009. Copper hovers above 2.0650 intraday support level with modest support from today’s Chinese stock gains. The Shanghai Composite closed today’s trading up 2.33 percent. Prior to the US data, metals made a comeback following decent Chinese PMIs and commodity recovery.

Oil price remained under pressure after report of unexpected stock build from the industry-group American Petroleum Institute in the Asian morning. Total crude inventories rose by 1.6 million barrels during the week ended today, while Cushing build reached 453,000 barrels. These figures prelude potential upside surprise in official inventory data published by the U.S. Department of Energy tomorrow.

An intraday support level to oil price comes at 41.50, followed by a 3-month support level at 41.21.

Note: OPEC semi-annual meeting kicks off on December 4 in Vienna.

GOLD TECHNICAL ANALYSIS – 20-day moving average at 1077.7 continues to cap the topside of gold price. Upward momentum is inherent and a test of this resistance is possible, except for a change of direction due to event risk. A firm resistance comes above that at 1098.8, limiting higher price extensions. Range trades prevail given current conditions.